eNET Internetkutató és Tanácsadó Kft.

The position of the telecommunications sector Q2. 2002

2002. November 17.

GKIENET conducted its telecommunications sector survey for the seventh time in the second half of 2002. The target group included telecommunications firms, companies providing cable TV, internet and mobile phone services.

Actors in the telecommunications sector are not expecting significant changes in terms of fees. The prices of international calls are the most likely to drop. The number of lines providing broader bandwidth and faster data flow is on the rise. The number of analog main lines is declining, while  ISDN  connections are gaining popularity. The  market is not saturated in terms of mobile phone service subscriptions; penetration is expected to grow more than 15% in 2002 and 2003 alike.

Voice over IP technology is mostly used in international calls. At present, traditional phone  and ISDN  are the most common types of services used, but VoIP services could gain significant popularity.

Price is a key factor in the market of voice and data services, but quality is playing an increasing role, as well. Companies in the segment spend over 11 billion forints on network development. High costs and slow recovery of investments are the major obstacles in network development.

Electronic procurement and sales are not common in the segment of telecommunications service providers.

Internet service providers allow more and more subscribers to access the world wide web. The household market is expanding at a faster pace than the corporate segment. Currently, traditional dial-up is the most common connection type, but it will lose market share over the next twelve months. Cable TV subscribers will increase at the fastest rate, but their market share will not exceed 2.6% within the next twelve months.

Online wholesale will see the most robust growth, but other electronic retail and wholesale solutions and the market of online advertising will expand dynamically, as well.

Price and quality are the two major competitive factors in the household and corporate segments alike. Internet subscriptions account for 51% of the total revenues of service providers.

Internet service providers do not generally take advantage of electronic sales and procurement. The lack of effective demand is the key factor curbing advances in competitiveness, but government regulation, high operating costs and overly intense competition are also significant obstacles.

Currently the number of cable TV subscribers is approximately 1,600 thousand. Cable TV companies provide starpoint service to as many as 89% of their customers. The number of subscribers is expected to continue to increase over the next year. Small firms believe that price is the key factor of competitiveness, while large companies think that the quality of service is a more crucial element. Cable TV companies do not generally provide internet service at this point, but this will likely become more common over the next twelve months. Electronic sales and procurement are not prevalent among cable TV companies, and this trend is not likely to change significantly during the period ahead.

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